Country Analysis Brief Overview

Algeria is the leading natural gas producer in Africa, the second-largest natural gas supplier to Europe, and is among the top three oil producers in Africa. Algeria is estimated to hold the third-largest amount of shale gas resources in the world. However, gross natural gas and crude oil production have gradually declined in recent years, mainly because new production and infrastructure projects have repeatedly been delayed.

Algeria's national oil and natural gas company, Sonatrach, dominates the country's hydrocarbon sector, owning roughly 80% of all hydrocarbon production. By law, Sonatrach is given majority ownership of oil and natural gas projects in Algeria.

Militant groups operating in North Africa and the Sahel have presented security risks to oil and natural gas installations in the region. In January 2013, a militant group stormed Algeria's In Amenas gas facility, resulting in several causalities and a temporary suspension of gas production at the facility.

Algeria holds the third-largest amount of proved crude oil reserves in Africa, all of which are located onshore because there has been limited offshore exploration. According to Sonatrach, about two-thirds of Algerian territory remains largely underexplored or unexplored.

The country produced almost 1.8 million bbl/d of total petroleum and other liquids in 2013, which includes crude oil, condensate, natural gas plant liquids, and refinery processing gain. The largest and oldest oil field, Hassi Messaoud, contributed more than 40% of total crude oil production, which averaged 1.2 million bbl/d in 2013.

The vast majority (about 72%) of Algerian crude oil exports are sent to Europe. The United States was the single largest destination until 2013 when U.S. imports fell to 29,000 bbl/d, or by more than 75%, compared with 2012.

Algeria has five oil refineries with a total nameplate capacity of 652,500 bbl/d. The vast majority of Algeria's domestic petroleum consumption, which averaged 380,000 bbl/d in 2013, derives from domestically refined products. Algeria's petroleum consumption has increased by an annual average of 5% over the past decade.

Algeria holds the world's tenth-largest amount of proved natural gas reserves and the third-largest technically recoverable shale gas resources. In May 2014, Algeria's Council of Ministers gave formal approval to allow shale oil and gas development.

Algeria's gross natural gas production was 6.4 Tcf in 2012, a 4% decline from the previous year. Production has steadily declined over the past decade as output from the country's large, mature fields is depleting. There are several new projects planned to come online, but they have repeatedly been delayed.

Algeria exports natural gas via pipelines and on tankers in the form of liquefied natural gas (LNG). It has three transcontinental export gas pipelines: two transport natural gas to Spain and one to Italy. Algeria's LNG plants are located in the coastal cities of Arzew and Skikda. Algeria was the first country in the world to export LNG in 1964.